If you realise that all digital circuits can be resolved down to a NAND gate (plus a host of other entities such as delay elements etc), you can write a circuit description file for a particular digital function, so as to allow this file to be inserted as a 'block' e.g. a NAND gate. More complex logic can then be built.
Another file can then be used to 'TEST' the circuit in software.
All you need is a lot of time, a pc and a simple compiler (C or Pascal etc)
This format is the basis of most kinds of ATE simulator software.
Chris